Photo: Robert Clark
High demand and low inventory has been a recipe for rising prices across most of the US housing market so far in 2017.
Single-family home prices were up in close to 90 percent of measured markets in the second quarter of this year, according to a report released earlier this week by the National Association of Realtors (NAR).
National median prices rose 6.2 percent annually to $255,600 for existing single-family homes in the second quarter, surpassing the $241,300 peak hit during the third quarter of 2016. Median home prices increased almost 7 percent from last year in the first quarter.
Single-family home prices were up in 154 out of the 178 metro areas measured by NAR. Annual price decreases were only recorded in 23 of measured markets. Double-digit price gains were recorded in 23 metro areas.
Home prices continued to trend upwards due to “pitiful” inventory levels, according to NAR’s Chief Economist Lawrence Yun.
“The 2.2 million net new jobs created over the past year generated significant interest in purchasing a home in what was an extremely competitive spring buying season,” says Yun, in a media release.
Homes were selling in under a month — and even quicker in the lower-end of the market.
“With new supply not even coming close to keeping pace, price appreciation remained swift in most markets,” observes Yun in the release.
The West Coast had some of the most expensive housing markets in the second quarter: San Jose, CA, San Francisco, CA, Anaheim-Santa Ana, California, urban Honolulu, HI, and San Diego, CA were the top five most expensive markets.
And with national building levels remaining low, prices are continued to rise in the remaining quarters of 2017.
“We’re forecasting increases of 5.6 percent in the third quarter, and 5.1 percent in the fourth. It’s not just that inventory is very low, but new construction is lagging while demand remains high,” George Ratiu, NAR’s Managing Director of Housing and Commercial Research, tells BuzzBuzzNews.
There were 1.96 million existing homes for sale at the end of the second quarter, down 7.1 percent from the same time last year.
One of the challenges facing builders is the availability of lots, which could be helped by a change in local zoning laws.
“There’s been a change in the more urban urban markets from a not in my backyard approach, to YIMBY or yes in my back yard for the building of affordable housing. Given the high costs of development, many builders have opted to construct high priced luxury homes,” says Ratiu.
More “accommodating” zoning regulations could entice builders to develop more affordably priced housing in areas where it is desperately needed, he adds.
Click here to read the entire report.